Correlation Between Asbury Automotive and Reservoir Media
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Reservoir Media at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Asbury Automotive and Reservoir Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asbury Automotive Group and Reservoir Media, you can compare the effects of market volatilities on Asbury Automotive and Reservoir Media and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Asbury Automotive with a short position of Reservoir Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Reservoir Media.
Diversification Opportunities for Asbury Automotive and Reservoir Media
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Reservoir is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media and Asbury Automotive is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Asbury Automotive Group are associated (or correlated) with Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Reservoir Media go up and down completely randomly.
Pair Corralation between Asbury Automotive and Reservoir Media
Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the Reservoir Media. But the stock apears to be less risky and, when comparing its historical volatility, Asbury Automotive Group is 2.03 times less risky than Reservoir Media. The stock trades about -0.22 of its potential returns per unit of risk. The Reservoir Media is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 944.00 in Reservoir Media on September 30, 2024 and sell it today you would lose (58.00) from holding Reservoir Media or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Reservoir Media
Performance |
| Timeline |
| Asbury Automotive |
| Reservoir Media |
Asbury Automotive and Reservoir Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Reservoir Media
The main advantage of trading using opposite Asbury Automotive and Reservoir Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Reservoir Media can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Reservoir Media will offset losses from the drop in Reservoir Media's long position.| Asbury Automotive vs. Macys Inc | Asbury Automotive vs. Wayfair | Asbury Automotive vs. 1StdibsCom | Asbury Automotive vs. Boqii Holding Limited |
| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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